- Cambridge has revised its method for estimating Bitcoin’s energy consumption, revealing its limitations.
- The previous method, which was used in 2019, treated all profitable mining machines equally, leading to older and less efficient models appearing more prominent during profitable periods.
- Cambridge is confident in the updated estimates and committed to transparency.
In a recent report, the Cambridge Research Center openly admitted that their previous method for estimating Bitcoin’s energy consumption had its limitations. This method had been in use since 2019 and worked well when Bitcoin mining wasn’t super profitable, but it struggled to accurately represent the energy usage during the Bitcoin boom of 2021. The problem was that their previous approach treated all profitable mining machines equally, which made older and less efficient models seem more prominent during highly profitable mining periods.
This issue led to a situation where even the newer and more efficient mining hardware was left gathering dust in warehouses because there wasn’t enough data center space for them. In reality, it would make sense for mining operators to swap out their old machines for newer and more energy-efficient ones to maximize their overall mining efficiency.
To tackle these problems, Cambridge has introduced some changes to their calculations. They now consider a weighting factor that accounts for the significant impact of the latest and most powerful mining rigs on Bitcoin’s total computing power and energy usage. Additionally, they’ve introduced a two-month delay between the release of new equipment and its actual operation.
These adjustments have led to a decrease in Cambridge’s energy consumption estimates. In 2021, their estimate dropped by 15 TWh, going from 104 TWh to 89 TWh. The 2022 calculation also decreased by 9.8 TWh, going from 105.3 TWh to 95.5 TWh.
Cambridge emphasized their confidence in these updated estimates and sees each update as a step toward improving their accuracy. They remain committed to transparency in their work and are determined to show how these changes have affected their previous estimates.
However, it’s essential to remember that Cambridge’s index provides only a rough approximation of Bitcoin’s actual electricity consumption due to the decentralized nature of the network. They are calling for further improvements in their methodology, as well as more consideration of the environmental impact of mining and potential ways to mitigate it.